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CONTENTS

54

OPENING STATEMENTS

Page
Bentsen, Hon. Lloyd, U.S. Senator from the State of Texas.
Montoya, Hon. Joseph M., U.S. Senator from the State of New Mexico.. 5
Randolph, Hon. Jennings, U.S. Senator from the State of West Virginia -
Stafford, Hon. Robert T., U.S. Senator, from the State of Vermont-

LIST OF WITNESSES
Blanton, Hon. Ray, Governor, State of Tennessee.
Evans, Hon. Daniel J., Governor, State of Washington..

59
Mandel, Hon. Marvin, Governor, State of Maryland.

58
Moss, Hon. Frank E., U.S. Senator from the State of Utah.

52
Rampton, Hon. Calvin L., Governor of the State of Utah.

56
Ritchie, William S., Jr., president, American Association of State Highway

and Transportation officials, accompanied by Henrik E. Stafseth, exec-
utive director. -

46, 66
Tiemann, Hon. Norbert T., Administrator, Federal Highway Administra-

tion, accompanied by Joseph R. Coupal, Deputy Administrator; Lester
P. Lamm, Executive Director, and David E. Wells, Chief Counsel.--

13
Prepared statement.----

30

68

8
11

ADDITIONAL MATERIAL
American Association of State Highway and Transportation Officials, re-

sponses to questions from Senator Randolph --
Bills, reprints of:

S. 952..

H.R. 3786.
Federal Highway Administration, summary of meeting with the Council on

Environmental Quality --
Statements for the record:

National Association of Counties.--

Walker, Hon. Dan, Governor, State of Illinois.-
Washington, State of, memorial from the legislature..

(III)

21

70
62

69

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INCREASING THE FEDERAL MATCHING SHARE FOR

HIGHWAY CONSTRUCTION

WEDNESDAY, APRIL 30, 1975

U.S. SENATE,
COMMITTEE ON PUBLIC WORKS,
SUBCOMMITTEE ON TRANSPORTATION,

Washington, D.C. The subcommittee met at 9:30 a.m., pursuant to call, in room S-407, the Capitol, Hon. Lloyd M. Bentsen (chairman of the subcommittee) presiding

Present: Senators Randolph (chairman of the full committee), Bentsen, Montoya, Burdick, and Stafford.

OPENING STATEMENT OF HON. LLOYD BENTSEN, U.S. SENATOR

FROM THE STATE OF TEXAS

Senator BENTSEN. Gentlemen, if you will take your seats, we will get this meeting underway.

Today we are going to receive testimony from Governor Tiemann and five of the Nation's Governors concerning the problems affecting our Federal-aid highway program.

The principal focus of today's hearings will fall on measures introduced in the House and Senate to temporarily increase the Federal matching share for highway construction.

On May 5, we will hear testimony concerning various House bills which seek to clarify a decision of the Second Circuit Court of Appeals, which required environmental impact statements to be prepared by the Federal Highway Administration rather than the States. We have asked some of today's witnesses to offer their comments on both subjects to avoid their having to return at a later date.

Since late last year, when the Nation's unemployment problems became acute, I had been urging the President to release impounded highway funds so that we could put people to work, not on public service jobs but on long-term quality improvements in American life. On February 12, the President ordered the release of $2 billion in impounded highway funds.

In a meeting with Governors several weeks ago, however, this committee received reports that the present condition of the economy and rising highway maintenance costs were beginning to restrict the capability of some states to match previously released funds. Because of our deep concern to see that released highway funds and future highway funds have the maximum employment impact, this subcommittee will explore the problem with Federal and State officials to determine what our course of action should be.

(1)

With unemployment now at the highest level in 34 years, with the prospect for even greater joblessness over the next several months, with unemployment in the construction trades now exceeding 15 percent, it is imperative that we give careful attention to the full utilization of highway funds.

The House has passed H.R. 3786, which would increase the Federal matching share for Federal-aid highways and certain mass transportation projects up to 100 percent of the increase in the Federal share before January 1, 1977. We have that proposal before us, as well as other measures introduced in the Senate by Senators Montoya and Moss.

In any examination of this question, the committee will know how many States need suspension of the matching requirement in order to take advantage of the $2 billion, how many need the flexibility offered in the House bill which offers States the opportunity to shift highway funds among most of the major categories, and whether the time constrictions for repayment in the House bill will render the legislation ineffective.

We want to explore these questions without preconceptions; however, I should note that the Federal-aid program has long been based on cooperative relationship between the Federal Government and the States. In whatever the committee decides to do on a temporary basis, we will want that shared responsibility to be maintained.

The other House bills, H.R. 3130 and H.R. 3787, are directed at a problem which recently arose in the Northeast because of a decision of the Second Circuit Court of Appeals.

The decision, which required environmental impact statements to be prepared by Federal, rather than State agencies, had a disruptive effect on highway projects in three States.

Although matters have improved in recent weeks, the committee is interested in determining whether projects remain stalled, whether legislation is necessary to get projects moving again, and whether the language of the House bill accomplishes the dual purpose of clarifying congressional intent on environmental impact statements and allowing properly prepared highway projects to continue.

We will have a joint hearing with the Interior Committee on these latter bills on Monday of next week.

Senator BENTSEN. I recognize the chairman of the full committee.

OPENING STATEMENT OF HON. JENNINGS RANDOLPH, U.S. SENATOR

FROM THE STATE OF WEST VIRGINIA

Senator RANDOLPH. Mr. Chairman, under your able leadership, the Subcommittee on Transportation meets today on what may not receive too much comment, or coverage in the press.

The issue before the Subcommittee on Transportation this morning was raised, ironically, by the release of $2 billion in impounded highway funds last February. While this action by the President was welcomed, we were informed that some States could not take advantage of this opportunity to accelerate their roadbuilding.

A decline in State highway revenues, plus the fact that the additional funds were unexpected and thus could not be planned for meant that these States would have to stand by and watch the new money go elsewhere. The result would be the obligation of these funds but their uneven distribution among the States.

The hearing today was scheduled to explore the nature and extent of the State matching shortage and to consider what Federal remedies for this situation might be necessary and feasible.

Relief legislation was passed by the House of Representatives earlier this month, and that measure-H.R. 3786—is before the Senate Public Works Committee. Another bill—S. 952—was introduced in March by Senator Montoya and approaches the problem from another direction. In addition, a third proposal was introduced by Senator Moss and is pending before the Finance Committee.

There are several facets of the matching issue which must be discussed this morning. At a time when inflation is reducing the buying power of the highway dollar, States should be able to utilize all of the Federal-aid funds available to them. This is true not only because improved roads are needed, but also because of the substantial antirecession factor built into the highway program.

In moving toward these goals, we must be careful that we assess the situation correctly. In receiving the matching problem with our witnesses, I hope we can determine which States cannot match Federal highway funds and the reasons for this inability. Is it a temporary problem caused by the sudden release of the $2 billion, or is there likely to be a long-term shortage of State revenues that will affect construction for several years? What would be the effect on other State activities if revenues were reallocated to match highway funds?

The proposals for easing the ability of the States to obligate the newly available money generally center around loans or advances of various sorts. While the problem may be immediate, I hope we will keep in mind that these loans must be repaid.

After the February release of the impounded money there was considerable pressure to obligate these funds before the end of the fiscal year on June 30. The passage of Senate Resolution 69 last week released the remainder of the highway funds and thus alleviated the need to meet the June 30 deadline. We will want to know if this easing of pressure also eased the matching problem.

The question of shifting funds among the various categories of highways also is important to our purposes. Some States may have adequate matching funds but have nearly reached their apportionment limits in the classifications where they are able to move most rapidly. There is, therefore, an understandable desire to increase the flexibility among categories--especially since we want to expand the highway program to create jobs. We must review, however, the impact of such shifting on the overall highway program.

The witnesses who will appear today all are deeply concerned with the highway program. Each of them is experienced in some facet of building roads. Our colleague, Senator Moss, has looked at the problem carefully and will discuss his bill. I am particularly pleased to have with us Governors Rampton, Evans, Mandell, and Blantonthe men who face the responsibility for providing State funds. Governor Tiemann shared these duties before he became Federal Highway Administrator. And from West Virginia, highway commissioner William S. Ritchie, Jr., will look at the problem as president of the American Association of State Highway and Transportation Officials.

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